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  1. Environment
11 April 2022

Councils can’t get us to net zero without more cash

The UK has ambitious net zero plans, but Westminster must finance local councils to make them reality.

By Rob Macquarie

The UK’s councils are increasingly on the front line in dealing with the extreme weather of a changing climate; they have spent hundreds of millions of pounds over the past decade on flood defences and coastal protection. And when a flood does break through, it is often the council that picks up the bill.

Yet over the same decade they have been hollowed out by funding cuts imposed on them by the government. Dealing with the pandemic has brought many of them almost to their knees. Austerity, which has been harshest in England, has forced many local authorities to try to fill in gaps by increasing council tax (which now raises 25 per cent more in real terms than at the start of last decade) but they have still had to reduce services. Without more secure funding from the Treasury, the UK’s climate goals are at risk.

More than three-quarters of councils across the UK have declared a climate emergency and most have climate action plans. Whitehall seems to recognise that it needs local partners to implement its plans to slash emissions: over 30 per cent of carbon reductions set out in the government’s net zero strategy require local authority involvement. A study for Innovate UK, an arm’s-length public agency, found that deploying “place-specific” low-carbon measures, such as prioritising insulation where housing stock is old, are far more cost-effective than a uniform approach. Similarly, a report for the Local Government Association argues that investing in council programmes to retrofit public buildings, local authority-owned housing and fuel-poor homes would create thousands of additional jobs and treble savings on energy bills.

Levelling up, which is at the heart of Boris Johnson’s agenda, ought to provide greater momentum for a more localised approach to climate action. However, these goals need funding properly. In reality scant cash has been handed out and strategic missions have been designed poorly, with a lack of coherence between major policy documents. It would have made sense, for example, to put net zero at the very heart of plans to level up.

“Funding pots at the core of local government are expected to deliver across a huge range of expectations, but they’re not going to meet what’s needed,” says Ellie Radcliffe from the Centre for Local Economic Strategies. Competition for tailored funds allocated for various policy priorities also reinforces inequality. Councils devote significant resources to bidding processes, benefiting those that are better off rather than those that need it most. 

In principle, local authorities have a versatile playbook for climate action, starting with the assets they control directly, such as Leeds’s nearly 400-strong fleet of electric cars and vans. Planning, procurement and partnerships can take things further. The West Midlands Combined Authority has established Energy Capital, a central node connecting the region’s local authorities with businesses. It co-ordinates energy investment with councils’ local planning and pursues strong local supply chains in green services. Devolution deals could allow more regions to follow suit.

Yet the funding shortage holds many councils back. Tight budgets mean limited capabilities, says Jamie Brogan at the Edinburgh Climate Change Institute. “We see how that manifests in much of our work with local authorities,” he says. “Many staff are on short-term appointments, and there aren’t enough people with technical and softer skills to design programmes, secure investment and build the partnerships to deliver net zero in a joined-up way across their area.”

Ironically, where finance is available, austerity makes it harder to access by constraining councils’ technical and financial ability to prepare attractive projects. The Public Works Loan Board and, more recently, the UK Infrastructure Bank provide cheap public finance. However, public resources alone are not enough, meaning councils have to woo private investors.

“The challenge is being able to cover the repayment over time, at the levels and returns most private investors would expect,” says Kit England, green economy manager at Glasgow City Council. It is hard to generate revenue from many of the measures needed, such as mass retrofits, flood defences or reforesting, and setting up complex financial instruments is tricky. Furthermore, bad deals could extract value from the local economy, aggravating financial difficulties down the line.

Solutions may lie in reimagining how communities come together to pay for local action. Over recent decades councils have sold off assets, such as county farms, where low-carbon and resilient approaches could be tested. Now some councils, such as North Ayrshire and Preston, are starting to reverse shifts in power, ownership and wealth through Community Wealth Building policies intended to stimulate local economies. “Ownership is the ultimate form of community buy-in, and should be a top priority if you want people to come with you,” argues Radcliffe.

Central to Community Wealth Building policies are alternative economic models that may include giving citizens the opportunity to invest in local initiatives. The investment platform Abundance, for example, enables councils to crowdfund from citizen-investors. “People think there’s a line between investing and charity,” says Bruce Davis, a co-founder of the platform. “We’ve been blurring that line.” He suggests such models could grow into “a new sphere of civic engagement”.

However, not every council has the resources, skills or confidence to adopt innovative approaches, and only a handful have raised money this way so far. More funding from central government could put councils on a more equal footing, in the spirit of levelling up, and empower more of them to take stronger climate action.

“Local authorities are the single institution that can do the most to drive a net zero trajectory,” says Brogan. If councils have to continue doing more with less, it will be at the expense of a climate-resilient future and have implications for everyone, everywhere.

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